Business Case Studies & Business Publications

A Note on Leases

Hopkins, Justin J.

Technical Note

A Note on Leases

Hopkins, Justin J.

C-2439 | Published May 28, 2020 | 6 pages Technical Note

Collection: Darden School of Business

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Product Details

This technical note explains how to account for leases under Accounting Standards Codification 842. This new addition to US generally accepted accounting principles became effective for fiscal years beginning after December 15, 2019. The note provides broad treatment for how a lessee will account for a short-term, operating, and financing lease, and how a lessor will account for short-term and sales-type leases with and without manufacturing profit. The intent is to provide a brief overview of lease accounting. As such, it is most appropriate for MBA or finance students who need to understand the broad effects of leases on the balance sheet, income statement, and statement of cash flows.